Building private label trust in emerging markets

One of the key challenges global (and especially local) retailers grapple with in an emerging market is the ramping up of private label sales.

In market such as China, India and Vietnam, private label penetration at global grocers is rarely over 10%. The rate for local retailers is typically much lower - maybe 2-3%. This compares to anywhere between 10-50% in more mature markets such as Europe and North America.

The reasons are numerous - and pretty obvious:

  • Modern retailing (and therefore modern PLs) generally have a shorter history in emerging markets - having only appeared over the past decade or two.
  • Retailers and their brands are therefore less strong and have less loyalty than in more mature markets. Without this trust, why should consumers buy a PL attached to the brand?
  • PL ranges can suffer from ongoing quality problems - local retailers in particular can struggle to manage PL quality control.
  • Shoppers are still brand conscious.
These factors can therefore lead to confusion with shoppers asking what does PL stand for - low price and low quality? Or low price and high quality? What values does the PL hold and how does it relate the retailer’s brand and proposition in general?
The photo above shows a common situation in a Walmart hypermarket in China where PL does not compare favourably with a leading brand. Why would a shopper make a leap of faith and switch from their usual brand to a retailer’s PL?
Of course, increasing PL penetration is a key strategy for pretty much all global retailers in emerging markets. Communicating a clear message - and the clear benefits of PL - will therefore be of growing importance.
A recent visit by Planet Retail to a Walmart/Bharti EasyDay Market hypermarket in Mumbai, India, provided a good example of how retailers are attempting to grapple with this challenge.
Here, the Walmart Great Value private label was offered - but the packaging (and instore promotional signage) included a collection of country flags where Great Value was also sold with the slogan - “Trusted by millions like you the world over”. The message it is communicating is simple and clear - the Great Value brand is a brand in its own right with a heritage and international reach. It is a PL, connected to the retailer, but it can be trusted - with high quality and low prices.

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